Oil nears four week High after Saudi Pledges to End Glut

Oil prices steadied on Wednesday as it near a four-week high a day early as Saudi Arabia, the top exporter of oil, promised to end flood of supply.

U.S. West Texas Intermediate crude was trading down at $52.38, a fall of 9 cents. While the global benchmark for oil, Brent crude, reported an increase of 8 cents at $58.41 per barrel by 0646 GMT, after a 96 cents – or 1.7 percent – increase on Tuesday.

The Organization of the Petroleum Exporting Countries (OPEC), as well as Russia and nine other producers were able to cut oil output by an estimated 1.8 million barrels a day (bpd) since January.

Khalid al-Falih, Saudi Arabia’s Energy Minister, stated on Wednesday that they will continue to focus their attention on lessening the oil stocks in industrialized countries, reducing them to their five-year average and raising the possibility of longer output restraint after the end of an OPEC-led supply-cutting pact in March 2018.

Mitsubishi Corp.’s oil risk manager in Tokyo, Tony Nunan, said that “OPEC is holding a line on the production cuts.” He further noted, “Even though shale (output) is now rebounding, the stocks are drawing, and now we're heading into the winter season, so the market is strong.”

Iraq’s disrupted exports amid geopolitical tensions in the country caused the oil prices to rise.

U.S. Crude

Analysts’ expectations missed the mark three times the past week.

According to American Petroleum Institute on Tuesday, U.S. crude stocks climbed to 519,000 barrels last week, which is far from the analysts’ expectations of a 2.6 million barrels decline.

API data showed gasoline inventories dropping by 5.8 million barrels, compared with the expectation of a 17,000 barrel decline with distillate fuel stocks, including diesel and heating oil, plummeting 4.9 million barrels, a far cry from the expected 860,000 barrel drop.

U.S. gasoline futures climbed as high as $1.7383 per gallon after the large decline in gasoline stockpiles, the highest since September 26.WTI’s profit margin for gasoline reached $18.60 a barrel, which is its highest in a month.

Crude futures for December falls 0.11 percent to $52.41 a barrel on the New York Mercantile Exchange.

Official government inventory data will be released on Wednesday, said the U.S. Energy Information Administration.

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